Does fiscal policy affect monetary policy?

A) No, because real output and income can and sometimes do move in the opposite direction from nominal money output and income.

B) Yes, because the Fed and the Treasury naturally tend to pursue similar goals.

C) Yes, because government deficits or surpluses affect the total demand for credit.

D) Yes, because the government usually prints new money to finance deficits and retires that money when it runs a surplus.

The relative quickness with which the Open Market Committee can respond to changes in economic indicators leads the Fed to

A) control precisely the growth rate of the money stock.

B) control precisely the growth rate of total spending.

C) make more frequent mistakes in monetary policy than Congress makes in executing fiscal policy.

D) use the discount rate to control bank lending and hence aggregate demand.